Why Are Insurance Premiums Rising?

Several factors have contributed to the widespread increase in insurance premiums across the industry. It's important to understand these factors to better appreciate why your rates may be going up:

1. Higher Rebuilding Costs: The cost of rebuilding your home has surged, driven by increased prices of construction materials and labor. Supply chain disruptions have also exacerbated the issue. As a result, insurance carriers must raise premiums to cover these rising costs.
   
2. Higher Vehicle Repair Costs: Auto insurance premiums have seen an increase of approximately 20% due to the elevated costs of auto parts and labor required for repairs. Additionally, modern vehicles contain more advanced technology features, making repairs more complex and expensive.
   
3. Higher Medical Costs: The skyrocketing cost of medical care has had a direct impact on insurance premiums. Bodily injury claims stemming from auto accidents have surged, driving up costs further.
   
4. Rising Litigation Costs: The expenses associated with litigation have spiked, increasing by an astonishing 30% in 2022 alone. This surge in legal costs is a significant burden on insurance companies, leading to higher premiums for policyholders.
   
5. More Frequent and Severe Auto Accidents: Post-COVID, the number of accidents and auto fatalities has increased significantly. The frequency and severity of these accidents have a direct influence on insurance premiums.
   
6. Higher Reinsurance Costs: Reinsurance, which helps insurance carriers manage catastrophic losses, is reaching or exceeding capacity in many markets. Rising reinsurance costs are becoming unsustainable for insurance providers, leading them to pass on these expenses to policyholders.

What Can You Do to Mitigate the Impact?

While rising insurance premiums can be challenging, there are steps you can take to minimize their impact on your financial well-being. Here are some strategies to consider:

1. Consider Higher Deductibles: Depending on your unique circumstances, opting for higher deductibles might be a viable option. This can help lower your premium costs, but it's essential to evaluate whether it's a practical choice for your specific situation.
   
2. Avoid Policy Cancellations: Insurers are now less lenient with reinstating canceled policies. If your policy lapses, you may need to pay your premium in full before it's reinstated. To prevent this, ensure you pay your premiums on time or even in advance.
   
3. Value Tenure: Frequent insurance company switches or a history of numerous claims can work against you. Some insurers may not accept you as a new client if you haven't maintained a policy with them for at least two years or have a significant claims history. So, stick with one provider if possible.
   
4. Manage Small Claims: Absorbing smaller claims when you can and saving for catastrophic losses is a wise financial strategy. The frequency of claims you file can significantly impact your insurance rates.

The current landscape in Spartanburg and the upstate of South Carolina of rising insurance premiums is a reality that many policyholders are facing. While these changes may seem daunting, understanding the underlying factors and implementing the suggested strategies can help you navigate this challenging environment. Remember, Select Source Insurance (864-585-8318) is a valuable resource for personalized advice and assistance in finding the best solutions, rates and coverage for your insurance needs. We represent many insurance companies and can shop and quote with all of them. By staying informed and proactive, you can make more informed decisions about your insurance coverage and protect your financial well-being.